Monthly Economic
Review
Monthly
economic
A brief commentary
on the Malawi
Economy
Review
February 2017
NBM Capital Markets Limited
1st Floor, NBM Towers
Corner Henderson & Hannover Streets
P.O. Box 945
Blantyre
MALAWI
Tel: 01 831 177 / 179
Email: [email protected]
Malawi Economic Overview
NBM CAPITAL MARKETS LIMITED
Gross Domestic Product
GDP ESTIMATE (%)
6
5
4
3
2
1
0
2012
2013
2014
2015
2016
2017
According to the RBM, the economy is expected to grow
by 5.6% in 2017, backed mainly by growth in the financial
and insurance services and wholesale and retail sector
where growth rates of 6.9% and 6.7% are expected. The
agricultural sector is also expected to recover and record a
5.9% growth rate. Other key growth areas are expected to
be the information and communication, transport and
storage services and accommodation and food services
sectors. (Source: RBM)
GDP
Inflation
Headline inflation for January eased by 1.80 percentage
points from 20.0% in December, 2016 to 18.2% in January
2017. Overall food inflation declined to 21.1% from 24.4%
in December 2016 while non-food inflation marginally
declined to 15.0% from 15.4%. The urban and rural rates
stand at 13.6% and 21.2% respectively. Government’s
long term target is for inflation to stabilize at around 12%.
(Source: NSO)
Exchange Rate Movements
The Kwacha remained stable against the USD during the
period under review. The local currency registered no
movement in the month of February and stagnated at
MWK 725.43/USD. This stability is expected to be
supported by the opening of tobacco marketing season set
for April 2017. (Source: NBM)
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NBM CAPITAL MARKETS LIMITED
Top Corporate Events
Reproduced from [email protected]
Telekom Networks Malawi Limited
National Bank Releases Trading Statement for FY2016
Telekom Networks Malawi Limited expects profit after tax
for the year ending 31st December 2016 to grow by at
least 20% on the previous corresponding period (MWK
5.4bn).
National Bank of Malawi (NBM) released a trading update
in respect of the year ended 31st December, 2016. The
company is advising shareholders that profit for the year
ended 31st December, 2016 is expected to be at least 25
percent higher than the previous financial year. The bank
went further to confirm that the publishing of the trading
update had been duly sanctioned by the MSE under
unique circumstances and only for the benefit of
shareholders of the company. The company posted a
profit of MK13.4 billion in FY 2015 and MK8.158 billion
during 1H2016; a 0.3 percent increase from MK8.138
million made in the previous corresponding period.
Illovo Sugar (Malawi) Limited
Illovo Sugar (Malawi) Limited expects its FY 2016 profits
to increase by at least 60% (FY 2015: MK5.5bn).
NBS Bank Limited
The bank is expecting its loss to increase by at least 20%
(FY 2015: MK 0.2bn)
Sunbird Tourism Limited
Profit after tax for FY 2016 is is expected to exceed the
previous corresponding period by more than 25% (MWK:
1.0bn)
MPICO
MPICO expects the Group’s profit for the year ended 31
December, 2016 to increase by over 100% above the
previous corresponding period
NITL
Blantyre Hotels Publishes Notice for AGM
Blantyre Hotels Limited (BHL) published a notice of the
Annual General Assembly to be held at Ryalls Hotel,
Blantyre on 9th March, 2017. Agenda items for the
meeting include the approval of the Chairman’s report for
the year ended 30th September, 2016. The Company is
expected to declare a final dividend of MK25.8 million,
representing 20t per share. If approved, the total dividend
for the year will be MK192.2 million or MK1.00 per share
(FY2015: MK103.4 million or tambala per share). The final
dividend will be payable on 24th March, 2017 and 17th
March will be the last day to register.
NITL profits are expected to decline by at least 200% for
the 12 months ending 31 December 2016. FY 2015 profits
amounted to MK0.6bn.
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NBM CAPITAL MARKETS LIMITED
MRA Underperforms against the January Revenue
Target
The Malawi Revenue Authority (MRA) failed to beat its
monthly target as it collected MK71.9 billion tax revenue
for January, 2017 against a projection of MK72.09 billion.
The authority managed to beat the target in the goods and
services tax category but fell short on taxes on income
and profits.
Pay As You Earn (PAYE) revenue was 36 percent below
target as MK14.5 billion was collected against a projection
of MK17.1 billion. This was attributed to delays in
remittance by government agencies following delays in
salary processing. Corporate tax collection also fell below
target as only MK17.2 billion was collected against a
MK21.2 billion target. The authority attributed this to
economic slowdown due to reduced power and high
inflation
Despite the setback in the month of January, 2017, tax
revenue collection remains above target for the 2016/17
fiscal year. Cumulative tax collected as at end of January,
2017 was MK449 billion, 9.2 percent above the MK411.2
billion target.
Maize Production to go up in 2016/17
The Ministry of Agriculture, Irrigation and Water
Development released the Agricultural Production
Estimates Survey. The results show that national maize
production is projected at 3.2 million metric tons, 35.9
percent higher than the 2015/16 final round estimate 2.4
million metric tons.
Production of tobacco, the country’s main cash crop is
expected to decrease by 36.6 percent while cotton
production is expected to go up 7.6 percent.
The second round of the survey will be conducted from
February to March and the third and final round will be
undertaken during the harvest period in April to May.
Top Macroeconomic Events
Minister of Finance Presents Mid-Year Budget Review
in Parliament
The Minister of Finance, presented mid-year budget
review in parliament convened in February. Total
expenditure for the 2016/17 fiscal budget has been
revised downwards from MK1,149.2 billion to MK1,129.4
billion. The Minister attributed the budget cut to decrease
in disbursements of foreign financed projects. Increase in
MRA tax revenue collection and higher dividend from the
Reserve Bank of Malawi has resulted in the revising
upwards of domestic revenue from MK783.3 billion to
MK840.5 billion. Grants from donors, however, have been
revised downwards from MK197.4 billion to MK158.7
billion due low disbursements from donors. Given the
revisions, the fiscal deficit has been adjusted downwards
from MK171.2 billion (4 percent of budget) to MK130.3
billion (3 percent of GDP). The majority of the deficit will
be financed by foreign borrowing as only MK42.3 billion
will be financed by domestic borrowing compared to
MK76.6 billion in foreign borrowing.
Launch of Nationwide Sensitization Campaign on
Electronic Payments
According to the Central Bank, the country’s key financial
infrastructure was stable resulting in the smooth and
successful processing of transactions in the various
payment streams. Overall, the total daily average of both
the volume and value of transactions increased during the
review period.
In January 2017, under the auspices of the NTEP, the
RBM in conjunction with the Ministry of Civic Education,
Culture and Community Development launched a
nationwide campaign to sensitize the general public on
electronic payments products. This initiative is one of the
major activities in the roadmap aimed at accelerating
uptake of electronic payments by the general public as
well as sole traders. (Source: RBM)
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Market Trading Reports
NBM CAPITAL MARKETS LIMITED
Treasury bill Yields
Treasury Bills Yields for February, 2017
During the period under review, the yield on the 91 days
T-bill was firm 24 percent. Average yield on the 182 days
T-bill and 365 days T-bill decreased by 0.10 percentage
points from 25.50% to 25.40% and by 0.56 percentage
points from 26.00% to 25.44% respectively.
27.00
26.00
25.00
24.00
23.00
22.00
07-Feb
14-Feb
91TB
21-Feb
182TB
28-Feb
364TB
Company Trading Statistics
The Malawi Stock Exchange (MSE) registered a positive
return on index as reflected in the upward movement of
the Malawi All Share Index (MASI) from 13127.73 points
registered in January 2017 to 13635.67 in February 2017,
representing a return of 3.87% (3.87% in US$ terms).
Performance Price Change over the Month
1
-30
-20
-10
0
10
20
OML
TNM
SUN
SBM
PCL
NITL
NICO
NBS
NBM
MPICO
ILV
FMB
BHL
DSI
MASI
30
Price gains during the month were recorded on four
counters – ILLOVO (18.5%), MPICO (8.04%), TNM
(7.20%) and NBM (0.37%). Only one counter, NICO,
registered a capital loss of 23.53% in February 2017
(Source: MSE).
Disclaimer: This report is not an offer or a solicitation to buy or sell the securities mentioned therein, and is provided
solely for the information of clients of NBM Capital Markets Ltd who are expected to make their own investment
decisions without relying solely on this report. Investments fluctuate in price and value and neither the investment nor a
return on the investment is guaranteed. NBM Capital Markets Ltd shall accept no liability for any direct or consequential
loss arising from the use of any information and opinions contained therein
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NBM CAPITAL MARKETS LIMITED
Regional Economies Overview
Reproduced from http://www.focus-economics.com
South Africa
Tanzania
South Africa’s GDP is estimated to have slowed down by
0.3% at a seasonally adjusted annualized rate in the final
quarter of 2016, which is typically one of the most
economically active periods of the year. According to the
report released by Stats SA on 7 March, the main drag on
overall economic growth was a massive decrease in
mining and slow activity in the manufacturing sector.
Compared to the same quarter of the previous year, GDP
increased 0.7% in Q4, mirroring Q3’s expansion. South
Africa’s GDP grew by just 0.3% in 2016 as a whole, which
is the country’s worst economic performance in seven
years.
The economy is expected to have been one of the region’s
top performers last year. On the overall in 2016, economic
activity is estimated to have expanded at a fast pace on
the back of lowered global oil prices and large-scale
infrastructure investment, despite sluggish growth in
agriculture as a result of unfavorable weather conditions.
However, one cause for concern is the government’s
sizeable fiscal deficit, which could become more pressing
going forward due to a projected fall in aid inflows and
volatile global financial markets. Tanzania’s economic
growth is set to remain solid going forward, underpinned
by continuing strong infrastructure investment as part of
the Second Five Year Development Plan and low oil
import prices. The country’s GDP is estimated to expand
7.2% in 2017 and 7.0% in 2018.
Mozambique
Mozambique’s economy got off to a rocky start in 2017
after the country defaulted on a USD 60 million coupon
payment due to creditors in January, a decision which
prompted S&P Global Ratings to downgrade the country’s
credit rating to its lowest level. With the government’s
credibility at rock bottom, the IMF has so far made no
move to provide the cash, and is awaiting the outcome of
an independent audit into the country’s debt due to be
released next month. This comes on the back of a
disappointing economic performance last year, with newly
released statistics showing that growth in 2016 as a whole
was the slowest since 2000. Mozambique’s economy
should pick up speed in 2017, but the suspension of
fundamental international aid and subdued foreign direct
investment will dampen growth prospects. Focuseconomists foresee growth of 4.4% in 2017, down 0.3
percentage points from January’s forecast.
Zambia
The country’s economic growth is expected to rise in
2017, supported by higher copper prices due to tighter
supply and robust demand for the metal. Domestic
manufacturing should also benefit from improving
electricity supply. According to Focus-economics, the
country’s economy is estimated to grow by 4.0% in 2017
and by 4.8% in 2018.
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